The economic downturn is providing opportunities for expansion for at least a few local accounting firms.
Doeren Mayhew, a Troy-based accounting and consulting firm, has kicked off an expansion campaign with the purchase of Troy-basedR.W. Frickel Co., a seven-person firm with $2.5 million in revenue that focuses on the construction industry.
“It adds 50 contractors to our portfolio. It’s a really nice addition to one of our key niche areas,” said Mark Crawford, Doeren’s managing director. Doeren Mayhew also focuses on the construction industry.
Crawford said Doeren Mayhew, which began the year as the eighth-largest accounting firm in Southeast Michigan, with 200 employees, plans on “at least two more acquisitions and perhaps several” of small local firms this year and to announce a major expansion out of state in the next couple of months. He declined to name the city, but said it would fit in with plans announced last year to expand into the Southwest or Southeast.
Doeren Mayhew opened up a two-person office in Houston last November.
Crawford said Doeren Mayhew had revenue of about $36 million last year. He said he wanted to add $4 million in revenue through internal growth this year and $12 million through acquisitions.
“We’re about 75th in size in the U.S. now. Our goal is to get to about the 50-60 range. We don’t want to get any bigger than that,” he said.
He said that while the recession has lowered the price of doing deals, the chief driver behind acquisitions is the need for small firms such as Frickel to be able to add resources and a wider range of services for their existing clients, or risk losing them.
“It’s harder for small firms to keep up,” he said.
Crawford said that while Doeren Mayhew wants to grow its geographic footprint, “We’re firmly committed to Michigan. We’re doing mergers here and growing our practice here. We’re going to remain headquartered here.”
Another accounting and consulting firm, Saginaw-basedRehmann, whose Troy office is the seventh-largest in Southeast Michigan with 224 employees, kicked off a geographical expansion in January, when its Rehmann Financial business unit acquiredDawson Wealth Management, a Cleveland-based firm with $1.4 billion under management.
Rehmann Financial made a second Cleveland-area acquisition in February, ofCotter Advisory Group L.L.C., a boutique firm with $200 million under management, and has memoranda of understanding to acquire a third Cleveland firm and three in southern Florida.
Gordon Krater, managing partner for Southfield-basedPlante & Moran P.L.L.C., the second-largest area firm with 840 employees as of the beginning of the year, said it’s a good time to expand through acquisition, and his firm expects to do so, as well.
“There are more opportunities out there with the downturn,” said Krater. He said Plante & Moran added 50 employees through an acquisition in Cincinnati last July and is looking to expand its Chicago operations through acquisitions.
“We’re looking at a couple of mergers there. We’re talking to people all the time,” he said.
Krater said the company also expects to expand into Kentucky and Tennessee to serve its Japanese-based auto parts suppliers.